Rules for claiming tax relief for travel expenses to temporary workplaces to remain unchanged despite Covid-19 impact

The “24-month rule” on claiming tax relief for travel expenses to temporary workplaces will continue to apply even if the employee was on furlough, HM Revenue & Customs (HMRC) has confirmed.

The tax authority said the rule will remain unchanged for both furloughed and working employees after a query was put forward by the Institute of Chartered Accountants for England and Wales (ICAEW).

Under the scheme, employees spending at least 40 per cent of their time at a temporary workplace for up to 24 months of “continuous” work are entitled to claim tax relief on travel expenses.

But if the placement extends beyond 24 months, or it becomes apparent that the placement will go on for longer than 24 months, the workplace is no longer considered “temporary” and workers cannot claim tax relief.

But the 24-month time limit will include both time spent at the temporary workplace and time on furlough, HMRC confirmed.

Commenting on the issue, the tax authority: “The government’s position remains that any period of furlough or working from home, whilst attending a temporary workplace, will be considered a period of continuous work.”

The ICAEW further explains: “To demonstrate the issue, the faculty uses the example of an employee who was due to work at a temporary workplace for 22 months, but three months in was placed on furlough for four months.

“When they return to the temporary workplace for 19 months to complete the 22 months of work, they are no longer entitled to claim tax reliefs. This is because it was known that the initial three months of work, the four months of furlough and the 19 months of work would be together greater than 24 months.”

For more information on claiming tax relief on travel expenses, please click here.

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Posted in Tax Credits.